7 Common Mistakes Made by Many Home Buyers
7 Common Mistakes made by Many Home Buyers
The process of applying for a mortgage to finance your home purchase can be overwhelming especially if you are a first time homebuyer. Fortunately a mortgage professional can simplify the process and find you the best mortgage that suits your specific needs. After reading this article you will know the most common pitfalls and how to avoid them. If you're a first time home buyer, you will be prepared to take your first steps towards home ownership with confidence.
(1) Not Knowing Your Credit Rating
Lenders use your credit history/rating to verify your repayment history and assess the risk involved in giving you a loan. Your credit report has a score that is based on your repayment history. You can improve this score by making the minimum payment on your credit cards, loans and bills on time. It is essential that you know what is in your credit report before applying for a mortgage or any kind of loan. Visit www.equifax.ca to request your credit report.
(2) Being Unrealistic About Your Affordability
Lots of people either over-estimate or under-estimate how much they can afford to pay for a home. Consult a mortgage professional to help you determine exactly how much you can afford. They will also answer any questions you may have. Most times people are surprised to find out that they can comfortably afford more than they originally thought.
(3) Not Getting Pre-Approved
Pre-Approval from a lender not only tells you how much you can afford but also guarantees you the current interest rate for 90 to 120 days. You can then start searching for your home with confidence.
(4) Assuming You Will Not Qualify For A Mortgage:
Whether you have been declined for a mortgage by your bank or even previously declared bankruptcy a mortgage broker may still be able to find you a mortgage. You may have to pay a higher interest rate which can be lowered when your credit situation improves.
(5) Too Focused On Interest Rate Rather Than Overall Mortgage Terms
Most people are only interested in getting the lowest interest rate they can get. The lowest interest rate mortgage is not necessarily the best mortgage deal. You must examine other terms of the deal such as compounding period, prepayment priviledges, payment frequency, etc. The best deal is the one that costs you less interest at the end of the term.
(6) Not Considering Mortgage Insurance
Buying a home is most likely the biggest financial investment you may ever make in your life. It is therefore important that you protect that investment from life’s uncertainties. Mortgage insurance can pay your outstanding mortgage balance in the event of your death or make your regular mortgage payments for a period of time if you become disabled.
(7) Forgetting About Closing Costs
Most people only budget for their down payment when purchasing a home. It is essential to budget for closing costs as well. These are other costs associated with the home purchase that are usually not included in the loan such as Property Transfer Tax, Lawyer/Notary Fee, Property Tax, Appraisal Fee, Property Insurance, Moving Costs, etc. Some lenders require you to have 1.5% of the home purchase price budgeted for these costs before the approve your mortgage.
Contact us here to schedule a free consultation call if we can help you or your friends understand the complexities of home buying. We'll chat with you for about 15 to 30 minutes and show you the latest home-buying technologies and strategies.
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